Once billed as a most cost-effective way of providing transport services in the government, leasing of motor vehicles is proving to be a costly and wasteful venture. This is so yet the choice of leasing over outright purchases was borne out of the need to cut costs.
The search for more innovative ways to curb public expenditure has never been as compelling as it is today. Thanks to the tough economic challenges, some counties find themselves entangled in this financial quagmire.
Laikipia, for instance, has cancelled a Sh721 million contract for leasing 21 motor vehicles. Each unit would have cost Sh32 million over five years. Since the cost of one double-cabin pick-up is Sh4.9 million, it means the money spent on leasing could have bought the county six of those vehicles. Now, the county does not own any of the vehicles despite blowing Sh500 million on them.
For its part, Bomet’s decision to buy, equip and maintain ambulances has turned out to be cheaper than a Sh43 million-a-year lease agreement for six vehicles. By the time it terminated the contract, it had already forked out Sh193 million.
While the decision to move from owning to leasing seems to have initially made sense, critics point out that, ultimately, the government will not own any of the vehicles despite having paid millions of shillings to the leasing firms and agencies.
Even the National Treasury has confirmed that the leasing deals have not been as cost-effective as was expected at the launch of the programme 10 years ago.
The anticipated Sh4 billion-a-year savings from leasing instead of buying and maintaining have not been forthcoming. It is, therefore, time to review the costly leasing scheme, which has turned out to be more beneficial to the lessors at the taxpayers’ expense.
There is no reason to continue with a programme that is not yielding the expected value, in savings on public spending. All the lease agreements should be re-examined and any corruption allegations investigated and the culprits punished.